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The Blacklist.

Updated: Jul 25, 2022

While small business owners continue to need financing to support and grow their businesses, as the economy continues to tighten so are lending options. If You Have Had an Issue Paying Back Your Term Loan, Line of Credit, or Merchant Cash Advance, You Are Probably on a Blacklist. In recent years internet and alternative lenders have become more organized and sophisticated in their quest of protecting themselves from borrowers who have had payback issues in the past. This article explores the different ways lenders protect themselves from those who have had payment issues before.

By Thomas Tramaglini, Managing Director at BRP Onesta About Thomas Tramaglini

Small Business Owners Need Money

From growing their businesses with new equipment to general working capital, small business owners are constantly in the hunt for financing for a multitude of reasons. In fact, nearly 1 in 2 business owners will seek financing of some type this year (I previously provided an overview of the statistics of how many small businesses are looking to borrow money for their business and for what purposes). Furthermore, when the economy hits bumps lenders like banks tend to tighten their parameters for lending. During the Pandemic, many months went by when lenders had $0 in total lending.

One simple statistic stands out – in 2021 nearly 32 million small businesses were in existence. Banks delivered only 12,000 or so SBA 7(a) loans during the same year.

Can The Past Haunt Small Business Owners When They Need Money?

The simple answer is YES.

In the olden days of the Merchant Cash Advance and term loans (2008-2020), there were always lenders who did not have the tools to do enough background on companies or small business owners and lenders would fund those who had bad payment performances in the past.

Today, internet and alternative lenders use several different tools that prevent funding those who have had issues paying back loans, lines of credit, and merchant cash advances.

One Strike and You Are Out

All in all, most lenders use one or more of the tools listed below to protect themselves. What this means is that if you have any issues with any payback, you will not get funded again. Period.